Role of Government in the Marketplace

EPA

EPA is the Environmental Protection Agency. It is an independent federal agency, created in 1970, that sets and enforces rules and standards that protect the environment and control pollution.

Zoning Laws

Cities and towns often pass laws designating that certain areas can be used for residential or business purposes only. Zoning laws may forbid homeowners from running certain businesses out of their homes.

Government Laws for Consumers

The Federal government and many states are actively involved in passing laws aimed at protecting consumers. They do things like setting manufacturing standards, requiring that drugs be safe and effective, and supervising the conditions in which food is produced.

Governmental Agencies

Demand for government protection of consumers and of the environment created several new government agencies and regulations.

Over Regulating

Businesses began pointing out that these new rules were costly to implement, cutting into profits, and slowing growth. Highly regulated industries said that government rules and regulations stifled competition and caused unnecessarily high prices.

Budget Cuts

Public pressure for leaner, less costly government resulted in budget cuts which reduced some government regulation of industry.

Informed consumers

Educated consumers help to make the free market system work more efficiently. This means that the government wants to educate consumers, and they do this by making sure producers give out information about their products. Products are more likely to be purchased when proper information is given to the consumers.

Public disclosure laws

Public disclosure laws were put in place to insure that companies were giving the consumers the proper information. The Federal Trade Commission Act requires that companies cannot make their advertisements deceptive (false advertising). Truth in Lending Act requires businesses to offer loans to disclose certain information to consumers